Ecuador to struggle to close funding gap: BAML

NEW YORK, Feb 25 (IFR) - Ecuador will struggle to cover
growing financing gaps in 2016 as funding options narrow for the
Latin American oil exporter in the face of political pressures
and rock-bottom crude prices.

Ecuador instilled some market confidence in December after
fully repaying the US$650m 2015s, the first time that the
country ever covered a maturing global bond.

But access to the international markets has effectively
slammed shut this year as investors flee EM credits with high
exposure to oil and the sovereign's bond prices sink in the wake
of the recent crude rout.

Ecuador last came to market in May last year when it tapped
its 2020s for another US$750m at final yield of 8.50%, marking a
vast improvement on the 10.50% it achieved when it first sold
the bonds at par in March 2015.

Since then however those bonds have plummeted to trade at a
yield of 18.60%-19% while the country's 2024s are being spotted
at 13.%-14%, according to Thomson Reuters data.

Ecuador could take out loans, though that will require
significant guarantees to get bilateral lenders on board at a
time of low oil prices, Bank of America Merrill Lynch said in a
report on Thursday.

Ecuador could also possibly increase advance oil sales, draw
down on public sector deposits or carry out further spending
cuts. However, with a 2017 presidential election looming, such
options are limited, the bank said.

"(We) see it as more likely that the adjustment variables
will be international reserves and accumulation of arrears," the
bank said.
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